Homebuyer subsidy program to launch 6 years after Katrina

Mayor Mitch Landrieu's administration has decided that six years is long enough.

As a part of the mayor's sweeping blight-fighting strategy, his housing policy strategists said Friday that a long-overdue $52 million homebuyer-subsidy program and a process for speeding up the sale of Road Home buyout lots will launch by the sixth anniversary of Hurricane Katrina, less than a month away.

View full sizeMichael DeMocker, The Times-PicayuneAn orange Road Home tag marks the curb in front of an abandoned home with tall grass on Music Street in Gentilly on Wednesday.

Landrieu's director of blight policy, Jeff Hebert, appeared at a New Orleans Redevelopment Authority meeting Friday with Brian Lawlor, City Hall's new director of housing policy and community development and the former head of New York state's housing agency.

Hebert made it clear that the city, and not NORA, would negotiate with Gov. Bobby Jindal's administration about how to dispose of thousands of Orleans Parish properties purchased by the state's Road Home program and currently held by the quasi-public Louisiana Land Trust.

"We will be executing a new (agreement for state funding) in the next 30 days," Hebert told NORA.

"Our direction from the mayor is crystal clear," Lawlor added. "He wants control of this issue. It is the city's issue."

The Land Trust will be considering proposals in Baton Rouge on Monday to roll out its own land-sale strategy if NORA can't ramp up its efforts and start selling 500 properties a month.

Right now, the redevelopment authority is far short of that, transferring fewer than 90 lots each month from the Land Trust into private hands. The city officials said they're working on their own target number directly with state officials, and that they, not the Land Trust board, will determine the process for selling the lots.

Mortgage program crucial

For more than three years, a key component of getting the Land Trust lots and other storm-damaged properties back into commerce has been a $52 million soft-second mortgage program aimed at creating new homeowners. A similar $27 million program in 2008 and 2009 gave more than 400 families that hadn't owned a home for at least three years forgivable loans of up to $65,000 and covered up to $10,000 in closing costs.

The program requires families to have sufficient credit to get a first mortgage, but as long as the homebuyer stays in the home for more than 10 years, the loan becomes a grant, and a family of modest means gets instant equity.

After several high-profile stumbles, the city's first soft-second program accomplished its goal. But then additional money former Mayor Ray Nagin had promised for expanding the effort was shifted elsewhere, and when Landrieu took office in 2010, he decided to shift the administration of the program to City Hall.

The city has also scrapped a previous plan to limit eligibility for the program to Land Trust properties.

The less-restrictive program should have enough money to get as many as 700 families into their own homes, not an insignificant dent in the massive blight caused by the storm.

Since 2007, the nonprofit, faith-based Jeremiah Group has pushed the state to use the money to help displaced renters become homeowners. They got the money transferred out of the state's disastrous Road Home small-rental recovery program in 2008, and for the past year, an agreement between the state and the city has been in place to provide the forgivable loans to low- and moderate-income homebuyers.

A fresh commitment

But the program never launched. Mayoral spokesman Ryan Berni now says the city is committed to finalizing the rules of the program around the Katrina anniversary.

That's a relief to Jeremiah Group leaders, who gave the city 60 days to give them a program outline in writing more than three months ago. The Rev. David duPlantier and other Jeremiah leaders said they want to work with the city, but their skepticism was rekindled when the deadline for the city to provide them with a written program passed in mid-July.

After speaking with Jeremiah leaders, The Times-Picayune asked the city for an update early this week. Hebert, Lawlor and others at the city then agreed to meet with Jeremiah officials on Friday afternoon. They provided a first draft of the program and asked Jeremiah to keep it confidential, but Hebert and Lawlor did offer some specifics:

The money will be split into two pots: One for forgivable loans of up to $65,000 to homebuyers based on need -- with families making less than about $45,000 qualifying for more than those with higher household incomes -- and another that would pay developers as much as $65,000 to defray their construction costs, again varying based on the income of the buyer.

In each case, there will be incentives to rebuild homes in one of 10 target zones. That geographic aspect is designed to make the program dovetail better with the mayor's blight-reduction strategy.

Jeremiah Group asked the city on Friday to make sure the money is available to all neighborhoods and to ensure that at least half of the households make less than 80 percent of the area median income, typically below $45,000.

'Cautiously optimistic'

DuPlantier said Lawlor promised that both component programs will be fully operational by mid-October. The Jeremiah leader said he was impressed with Lawlor's experience and stated dedication to community involvement.

"I'm cautiously optimistic. But I'll just say I felt that way in the first meeting I had with Dr. (Ed) Blakely, too," duPlantier said, referring to Nagin's recovery czar, who came with impeccable credentials but was widely seen as a disappointment.

At one time, Jeremiah kept to a hard line about how the $52 million should be spent, but softened considerably as the process dragged. This time, the group is willing to let the city give the money directly to developers -- as long as it produces new homeowners of modest means.

"You'd think in New Orleans, of all places, that if they have $52.3 million to put people in homes that they would have put it out on the street," said Pierre G. Walker from Trinity Episcopal Church, another Jeremiah Group leader.